Well played – How Lego rebuilt its brand brick by brick

But Lego’s journey hasn’t been smooth, with decades of success preceding a brush with bankruptcy, followed by its meteoric rise in recent years to become the most powerful brand in the world, according to a February study published by Brand Finance.

Lego, taking its name from ‘leg godt’, Danish for ‘play well’, began life in the early 1930s. In the 1950s the company, with founder Ole Kirk Kristiansen’s son Godtfred at the helm, introduced its system of play concept, with the interlocking plastic bricks we know today arriving in 1958. Through the introduction of its core principles of play, the company’s mission was, and still is, to inspire and develop the builders of tomorrow, enabling children to learn through play – thus ‘playing well’.

First Lego product line, 1932

For a long time, the company reaped the rewards of its revolutionary thinking, enjoying many years of continual growth. And surely it had earned it? There are, after all, 94 Lego bricks for every person on earth.

But by 1998, The Lego Group faced its first deficit. The company moved into licensing in 1999 – an area that would prove hugely lucrative through the years – with the release of Lego Star Wars to coincide with The Phantom Menace film. Turnover went through the roof initially but it had become so volatile that the company could no longer control its bottom line. The Lego Group had begun burning money, reporting a deficit of 1.4bn Danish kroner in 2003.

“We went totally astray as a company, and I think if we’d had more focus on the consumer, and had listened to them, we would have seen the warning signs earlier than we did,” Conny Kalcher, vice-president of marketing and consumer experiences, tells The Drum.

So began a process of rebuilding the beloved brand from the ground up, with owner Kjeld Kirk Kristiansen leading an action plan to turn its fortunes around.

“We are a manufacturing company so we were driven by engineers – we had to move the company to become much more consumer-focused,” says Kalcher, speaking at the recent Global Marketers’ Conference in Marrakech.

Experience was at the top of the agenda for the brand as it sought to be a small giant – it had the aim of being the best, not the biggest. Like its neatly stacking bricks, the company needed each of its consumer touchpoints to lock together.

To better understand its consumer base, the company began segmenting it by affinity for the first time, using net promoter score to understand what its consumers like and want. But the motivation isn’t simply altruistic – it makes economic sense. By turning a detractor into a passive promoter, Lego can increase that consumer’s spend by 20 per cent. Brands who master the art of listening tend to carve successful strategies out of that happy equilibrium with their customers.

“If you want to be a premium brand you have to keep demonstrating that you are listening,” says Kalcher. “Never become too big, or too arrogant, because the moment you do, the consumer moves away from you.”

In recent years, the brand’s traditional paid media campaigns have been augmented by the development of a more reactive, real-time approach. In addition to its planned campaigns around product launches, for example, it has developed a real-time approach to social media and content to help achieve its ambition to orchestrate 360-degree marketing.

Real-time ‘listening stations’ have been introduced, allowing the brand to monitor sentiment and respond quickly if needed – invaluable during the social media pressure placed on Lego after Greenpeace released a controversial video criticising its partnership with Shell.

The shift from paid to earned media has created a new need for content, with the brand’s perception of itself changing to fit that role. “We used to be a toy manufacturer. Now we’re turning more and more into a media company to tell our story about these bricks. We need a lot of content to tell that story,” says Kalcher.

And in the last 10 years, the company has embraced content like no other toy brand. It has realised the value of drawing on the wealth of knowledge, enthusiasm and engagement to be found in its own fanbase to help it meet the demand for content.

Co-creation with its fans has become an intrinsic part of the Lego marketing strategy. The benefits are obvious; the most dedicated fans often know the product better than the company itself.

One example of how this has manifested itself is in the Lego Movie, with fans’ mini-movies appearing in the actual film. The Lego Ideas platform, meanwhile, allows fans to propose their own ideas for new Lego sets. If an idea receives support from 10,000 members of the online community, the company reviews the concept with a chance the design will be translated into a real Lego product.

Whether originating from the marketing department or its fans, the brand is aligned with popular culture, becoming part of it in the process. During the Oscars, Lego versions of the iconic statue were handed out to stars on the night. There’s a Lego version of 50 Shades of Grey, and when Felix Baumgartner jumped out of space, there was a Lego version on YouTube the next day.

Such a journey from toy manufacturer to a global media force to be reckoned with is quite a jump from the near-bankruptcy the company was facing 12 years ago. It has brought varied challenges for the marketing team, which needed a change of mindset, says Kalcher. “We’re not experts in this, we’re just trying, testing and learning. We’re also failing – this is a journey we’re on.”

Rarely has a brand rebuilt itself from a crisis as dramatically as Lego has done. With nine consecutive years of growth since its turnaround, more Lego films on the horizon, and a global content machine fed by its millions of fans worldwide, it looks like the company is learning by its own principles and playing well.

Brick by brick, it’s reinforcing its foundations as the world’s biggest toymaker, with consumers at its heart.

This feature was first published in the 15 April issue of The Drum.